April 2024 Hi-Desert Real Estate Market Update

Greetings, Fans!

Over the last month the wheels have been thrown off any prior forecast on the future of our real estate market.

First, the National Association of Realtors (NAR) settled several lawsuits. The media is talking about how this will change the way real estate is done in the future. President Biden even weighed in and told us the economy will be better because of all the money people will save in real estate transactions. This is a false statement. The simple important facts are real estate commissions have, in the last 50 years, been negotiable. The second fact is: the buyer has always paid the commission. Sellers build the commission into their asking price. Rarely does a seller not ask for a net sheet to see what the outcome of a potential sale will be. They work with their Realtor to develop a price point that is competitive in the market AND gets them the net they are looking for. I cannot imagine sellers will ask less if they do not have to pay the buyers side of a commission. In today’s economy, many buyers cannot afford more cost to buy a home. I would assume we will quickly see lenders give a margin of value to the buyer to account for the commission. Bottom line is the process will change but not the cost.

Second, the economy is still red hot, and inflation is still higher than the Fed’s target. During the first part of this year, and on my Update, there has been a sense of hope that the Feds will lower rates by late spring. Over the last month, I think this hope has been fading. IF we see a reduction in rates, it most likely will not happen until fall. And if they decide to lower the Fed rates, it will not have a big effect on mortgage rates. Mortgage rates are tied more to the 10-year T-bill rate than the Fed rate. At this writing mortgage rates are in the high sevens to low eights. At this writing, the 10-year T-bill is at 4.55%. If you are tracking rates to try to forecast the future, watch the T-bill rate. Mortgages trend between 2.50% and 3.50% over the T-bill rate.

BTW…home prices are currently growing at around a 5% rate nationwide. Buyers are fighting high rates and rapidly accelerating costs to purchase a home. The cost of insurance in California has almost doubled for most homeowners making home ownership even more difficult to attain.

Highlights of this Update include-

1. Inventory remains high. At this writing, we have almost 660 active home listings in our area.
2. We closed escrow on just eighty-three homes last month compared to 113 last year.
3. The average price per square foot increased in all three larger markets last month.

As always, if you know someone who could use help in our local real estate market, please share my contact information. I hope you have a fantastic beginning to your spring.

Sincerely,

Bob Armstrong
(760) 221-2999
DRE #01275801
GREEN Real Estate Group